Markets shrug off investigation into Powell

0:29Good morning from the Financial Times. accept a nomination from the Trump administration to be the chair of the Fed right now, thereby proves that they are unqualified for the job. I'm Mark Filippino, and here's the NewsUni to start your day.

0:53UBS Chief Executive Sergio Armadi plans to step down in April next year. Sources told the FT that Irmadi will leave his post once UBS fully absorbs Credit Suisse. Switzerland's government orchestrated the acquisition in 2023 when Credit Suisse was at risk of collapsing. Irmadi has had two stints as CEO. His first went from 2011 to 2020, and this one began during the Credit Suisse takeover. Whoever replaces him will have their hands full. The Swiss government wants to tighten UBS's capital requirements. that sparked rumors that the bank might move its headquarters elsewhere.

1:35Paramount is not giving up the fight to buy Warner Brothers Discovery. Now, if you've gotten a little bit lost in this crazy story, can't blame you. So let's back up a little bit. Netflix and Warner Brothers Discovery sealed a deal in December. Then Paramount came in hot with a series of hostile bids, which Warner Brothers Discovery rejected. Now, Paramount is threatening a proxy fight. I'm joined by the FT's Oliver Barnes to explain this very dramatic deal-making saga. Hey, Oliver. Thanks for having me, Mark. So what is Paramount threatening to do here? Basically, Paramount's trying to coax Warner Brothers' discovery back to the negotiating table.

2:14On Monday, it went public with plans to pick a proxy fight to refresh the board of Warner Brothers, effectively to bring on a few directors who would be sympathetic to the cause of Paramount and the idea of re-engaging with them. And then also it sued Warner Brothers Discovery to gain access to key financial information behind the decision that Warner took back in December to go with Netflix's deal. Oliver, why is Paramount taking it to this level? Why not just take the L and walk away? Behind this is a massive, fascinating cast of characters, including Larry Ellison, the Oracle billionaire who's funding a large portion of Paramount's bid, and his son, David Ellison, who runs Paramount.

3:02And the reason they've pursued Warner so aggressively is it's one of very few assets of its kind left. It has a huge movie studio which produces hits like Harry Potter and the DC Comics franchise. And then also it has a streaming service, HBO Max. Paramount wants to become a real player in Hollywood. And the Ellisons believe that the avenue to doing that is getting Warner. Why hasn't Paramount's aggressive strategy worked? Like why is Warner Brothers holding out for this Netflix deal? Well, the question of whether it's worked or not I think is a bit TBD. The idea here, I think, from Paramount is to draw enough attention to their case that then effectively, whenever there's a shareholder vote further down the line on Netflix's deal, that there's a critical mass of Warner shareholders that actually say, no, we're not going for Netflix's deal.

3:58And fundamentally here is kind of like a question of which bid is better. And it's a little bit ambiguous. Paramount put$30 a share in cash on the table for the whole of Warner's business. That's studio streaming and its legacy cable assets like CNN. Whereas Netflix put$27.75 in cash mainly and a bit of stock on the table for just the studio and streaming assets. And also, Netflix's shareholders don't entirely love this deal either in that their stock has kind of traded down since this deal was announced in early December. So what we could see is both a combination of kind of Paramount winning over Warner and then Netflix finding it difficult to kind of come in and match that and pursue the company as aggressively.

4:51Now, Oliver, I think it's important to mention that Warner Brothers Discovery has said Paramount was, quote, seeking to distract with a meritless lawsuit and attacks on a board that has delivered an unprecedented amount of shareholder value. Netflix has not responded yet. But I want to zoom out a little bit and talk about potentially what this saga tells us about the state of dealmaking in the U.S. right now. Are there any larger trends or themes that we can draw from this? One of the things we saw in 2025 was the number of large like mega deals where kind of already quite consolidated industries consolidated yet more.

5:35The fact that this story has had another twist in the tail in 2026 is a lesson that the kind of themes we saw in deal making are not going anywhere. Generally, consolidators see a window to do so under the Trump administration because antitrust laws and antitrust regulations feel like they've stepped back a little bit, like there's room to maneuver in a way. And therefore, what you get is these prized assets. People are hungry for them and people will scrap over them. And that's what we're seeing here with Paramount's like continued efforts to coax Warner back to the negotiating table. Oliver Barnes is the FT's U.S.

6:13deals and activism correspondent. Thanks for breaking that down for us, Oliver. Thanks, Mark.

6:23Gold hit a record high and the dollar weakened yesterday. The market moves came after the U.S. Department of Justice launched a criminal investigation into Federal Reserve Chair Jay Powell. The probe is related to Powell's congressional testimony about a renovation of the central bank's headquarters. This is an escalation of President Donald Trump's crackdown on the Fed. But investors seem kind of unfazed. Here to tell us more is the FT's U.S. economics commentator, Rob Armstrong. Hey, Rob. It's great to be here. Good to have you back, Rob. So let's start with a little bit of background. Of course, this is all part of Donald Trump's ongoing threat to Fed independence.

7:00He has pushed to get interest rates lower. What has the market reaction been to this most recent investigation? I would say the market reaction has been quite mild so far. The biggest move we've seen is the move in gold up. And we have seen a not terribly large but significant move down in the dollar. And I think you could probably attribute both of those to the hedging of volatility. That's investors saying choppy water ahead. let me either hedge my dollar position, reduce my dollar position, increase my gold position, so I'm not so much at the mercy of America's monetary authorities who seem to be under direct assault right now.

7:51So, Rob, while markets were tepid, ex-Fed chairs were really upset. Janet Yellen, Ben Bernanke, and Alan Greenspan all issued a joint statement and compared the DOJ's lawsuit to what we would see from an emerging market with weak institutions. Investors are often wary of emerging markets. Why wasn't yesterday's move enough to get investors nervous? First of all, this is a market where investors have learned by experience, especially over the last year, not to take Trump actions too seriously. running and hiding when the president says or does something that is on the face of it crazy and destructive has not been a good investment strategy in the last year or so.

8:36Point number two is contrary to their reputation in some quarters, markets are quite myopic. The economy is okay right now. Corporate profits are strong right now. And so a threat like this, which is serious but a bit abstract is kind of easy to ignore in the short term. Somebody else used the metaphor for the Fed as a kind of parachute. And as long as the plane is flying along okay, somebody says, oh, there's no parachutes on the plane. Maybe you don't worry too much. You just assume the plane's going to come in for a smooth landing and you won't need the parachute anyway. Rob, I'm curious if the markets are maybe less concerned about this because Powell's term as chair ends in May anyway.

9:25If that's what markets are thinking, that this is okay because Powell is out in May, markets are wrong. The real problem with what the Department of Justice has done here is that it destroys the credibility of whoever the next Fed chair is. I would go so far as to say anyone who would accept a nomination from the Trump administration to be the chair of the Fed right now thereby proves that they are unqualified for the job. Yeah. Why is that? Yeah. That's a real big statement, Rob. Give me more. Yeah, I think that at the heart of how the Fed has done its job in recent history has a lot to do with the independence of the Fed from the whims of the president or even the whims of Congress.

10:24and if with this cloud of this lawsuit hanging over the situation you accept the nomination to be chair of the fed you are de facto saying i don't care about fed independence here's the president's toady and maybe you can explain to me mark how uh an organization like the fed is supposed to work under those conditions i myself can't figure it out i also do not have an answer for you, Rob. Going back to the Powell news and the threat to Fed independence that it represents, the markets, as we said, have shrugged it off. What would need to happen for markets to care about this? Well, we might get a little taste of this today.

11:08We do have a CPI inflation report. And if that report or another inflation report in the coming months comes in a little hot, We could get a reminder of why Fed independence is so important. Fed independence reassures the market that if inflation gets going again, somebody will step in and damn the torpedoes and put a stop to it. It would at least look a little dicey after three straight quarter point cuts. Correct. Rob Armstrong is the FT's U.S. financial commentator. Thanks as always, Rob. Cheers.

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